A plan to ‘flip the script’ on taxes in Mobile

Mobilians are often of two minds on important issues, which can lead to some rather strange arguments. Need examples? Well, is this The Azalea City or The Port City? Which mall is better, the one on the north side of Airport Boulevard or the south side? Bankhead or Wallace? Bridge or no bridge? WeMo, MiMo or LoDa?

Such debates even bleed into much less important issues, such as the way we pay taxes. Property or sales?

If you take a look at the way things have evolved in The Port/Azalea City, it appears obvious the proponents of higher sales taxes and lower property taxes have won the day. But have they actually? Does anyone really win when you live in one of the few cities in these United States carrying a 10 percent sales tax?

The Ad Hoc Committee for City Revenue has come to exactly the opposite conclusion, and frankly, what they say seems to make a lot of sense. This group is proposing a way to take the dreaded “Penny Tax” back out of the city coffers and replace the revenue with a combination of a garbage-collection fee and a property-tax increase.

OK, let me talk you back down out of the tree most of you climbed like scared cats when you read the words “property,” “tax” and “increase” in succession. Any sentence containing those three words in a row that doesn’t also have phrases such as “over my dead body” or something about a cold front in Hell is anathema to the Alabamian in general and the Mobilian in particular. But before I call the fire department, come down and just listen for a second because, if executed properly, the proposed plan might actually save most of us some money and help the city in the process.

So let’s see how this idea would work. According to the Ad Hockers, “Da Penny” — the much-loathed tax increase enacted in 2012 that has been hanging around since — brings in between $28 million and $32 million a year, so any changes would have to leave at least that much in city coffers. By dumping “Da Penny,” instituting a $7-per-month garbage fee and a 10-mil property-tax increase, members of the committee say the average Mobilian would see at least a small personal savings, the city would receive roughly $2 million more a year and a pay-as-you-go-type system could be set up that would ensure equitable capital expenditures in each of the city’s seven districts each year.

Sounds good, right? So what’s the issue?

“There are two issues we face,” said committee member Quin Hillyer. “One is inertia. People don’t trust any changes to the status quo. The second is people don’t realize how much they pay a year in sales tax.”

According to the committee’s study, the overall cost savings for the median home-owning family in Mobile would be $157. It’s not enough to put junior through clown college, but if the numbers are right, it could still be a little more change in the average Mobilian’s pocket. Those are the conservative numbers, considering that for each $10,000 spent in the city of Mobile, the one-cent reduction in the sales-tax rate would save $100; the savings could be greater for some.

Yeah, I know, it all sounds pretty rosy because we’re not talking about that 10-mil property-tax increase and that new garbage fee. And I feel you on that. Like anyone else, I don’t like seeing fees and taxes going up, but you have to keep an eye on the bottom line. Every time you spend $2 less at the grocery store, or $200 less on a car, or 13 cents less on that $13 mankini bathing suit you’ve had your eye on, it adds up.

Now according to the committee, we can get this garbage pickup fee done for just about $85 a year, which is pretty astounding considering it’s $24 a month in Montgomery and $16.50 a month in Huntsville. They feel that at $7 a month, landlords aren’t likely to pass the cost on to tenants, although my guess is those who own lots of properties would be more likely to.

And speaking of those who own lots of properties, they are certain to be the loudest voices against a plan of this type, and understandably so. But Mobile’s current property tax is in about the lowest 11 percent of counties in the U.S. with populations over 20,000, while our sales tax is as high as almost any city in the country. In other words, property owners here are getting a terrific deal, but all of us who buy anything else are not.

Even a D student in logic could explain how high sales taxes are inherently regressive — they hit the poor hardest as an overall percentage of income. Sales taxes are also notoriously shifty, making it hard to budget year-to-year because we’re never quite sure what consumers will spend.

Tying Mobile’s economy just a little more to property taxes instead of sales taxes should mean the city won’t go in the tank every time there’s a recession, and as property values increase over time, the city will see revenue increase in concert with growth.

I have no doubt this concept will be hard for some to wrap their heads around. If they see that $85 garbage fee on their property tax assessment, a lot of people are likely to have a vein pop deep inside the back of their brain. You have to remember it’s going to amount to paying up front, but getting more money back in a trickle.

For some time I’ve advocated the entire state looking at the way we structure taxes. Alabama’s bottom-of-the-barrel property taxes are nice, but combined with our rather poor populace they leave us with very little money to do many necessary things. The low property taxes also serve most those who are massive landholders, while the high sales taxes nail the poor.

The city’s leaders should take a good look at this plan because it seems to have the potential to flip the script a bit in The Azalea/Port City, stabilizing our finances, helping our poor citizens and giving small businesses a lift in the process. Hopefully we can come together and be of one mind, for once achieving what would be monumental change.

About The Author

Rob Holbert is co-publisher and managing editor of Lagniappe, Mobile’s independent newspaper. Rob helped found the newspaper after a career that started as a police reporter and columnist at the Mississippi Press in Pascagoula. He followed that with a stint as a deputy press secretary for then-U.S. Senate Majority Leader Trent Lott in Washington, D.C.
After leaving Capitol Hill, Rob worked ghost-writing opinion articles for publication in some of the nation’s largest newspapers. From 1999 through Aug. 2010 he was the faculty adviser for the University of South Alabama student newspaper, The Vanguard, and in 2002 started Lagniappe with his business partner Ashley Trice. The paper now prints 30,000 copies every week and is distributed at more than 1,300 locations around Mobile and Baldwin Counties.
According to Scarborough Research, Lagniappe now has more than 80,000 readers each week, with close to a quarter of that coming online. The paper began publishing weekly at the beginning of April 2014.